349 F. Supp. 3d 881
N.D. Cal.2018Background
- Volkswagen sold TDI "clean diesel" cars (2009–2016) marketed as low-emission, while allegedly installing software that reduced emissions only during testing, causing high on-road NOx emissions.
- On Sept. 18, 2015 EPA disclosed VW's defeat-device scheme; hundreds of consumer suits followed and MDL consolidated cases in this district.
- VW settled claims for consumers who still owned or leased affected cars as of Sept. 18, 2015; this case represents putative class members who had sold or exited leases before that date.
- Plaintiffs allege three theories of injury: (1) overpayment/"clean diesel" premium (including depreciation that made the premium unrecoverable on resale), (2) inflated financing and leasing fees tied to inflated vehicle prices, and (3) that some would not have purchased/leased at all had they known.
- Defendants (VW and Bosch) moved to dismiss for lack of Article III standing, RICO statutory/causation defects, preemption by the Clean Air Act, Rule 9(b) and Rule 8(a) pleading failures, and various state-law limitations and pre-suit requirements.
- The court denied dismissal for Article III standing (finding the depreciation-based premium theory plausible), upheld RICO claims against Bosch, rejected Clean Air Act preemption of the state-law fraud claims, but found affirmative misrepresentation claims failed Rule 9(b) (omission claims survived); several state-procedure issues deferred or resolved (Mississippi pre‑suit requirement dismissed without prejudice; Ohio DTPA consumer standing denied).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing — overpayment by former owners who resold pre-disclosure (depreciation theory) | Plaintiffs: premium for low-emission feature partially depreciated and was not fully recovered on resale, so they suffered a concrete economic injury | VW: purchasers who resold pre-disclosure suffered no economic loss because both purchase and resale prices were set before disclosure; analogy to in-and-out traders and prior cases | Court: allowed standing — depreciation plausibly made part of the premium unrecoverable; fact of damage sufficiently concrete at pleading stage |
| Standing — former lessees and lease-based fees | Plaintiffs: lease payments were based on inflated purchase price (premium) so lessees paid unrecoverable premium; some lessees never would have leased | VW: residual values incorporate premium so lease payments net out; reliance and particularity lacking | Court: lessees plausibly injured by premium-based higher lease payments; "never-would-have-leased" theory plausible for lessees at pleading stage; acquisition/turn-in fees not shown causally linked |
| RICO standing and proximate cause against Bosch | Plaintiffs: paid premiums and fees as a result of enterprise fraud; Bosch helped design/implement defeat device, so its RICO predicates caused consumers’ losses | Bosch: consumers are indirect victims; dealers/regulators are more direct; damages and apportionment problems; Bosch didn’t set prices | Court: RICO injury to "business or property" satisfied (overpayment/fees); proximate cause adequately pled under factors from Mendoza/Anza/Hemi — no more-direct victim established and apportionment/damage issues are factual |
| Clean Air Act preemption of state consumer-fraud claims (42 U.S.C. § 7543(a)) | Plaintiffs: state consumer-protection claims target VW's deceit of consumers and can be proved without establishing regulatory violations | VW: claims "attempt to enforce" federal emissions standards and are preempted | Court: state-law fraud claims not preempted — they require proof of deception (more than) and can often be established without proving violation of EPA standards (less than); conflict/field preemption rejected |
| Rule 9(b) for state-law misrepresentation and omission claims | Plaintiffs: widespread advertising and omissions alleged; omission specifics identified | VW: affirmative misrep allegations lack who/what/when/where/how for each plaintiff | Court: affirmative misrepresentation claims dismissed for failure to satisfy Rule 9(b); omission-based claims (failure to disclose defeat device and noncompliance) survive |
| Miscellaneous state-law procedural bars (statutes of limitations, class limits, pre‑suit notice, Ohio DTPA standing) | Plaintiffs: tolling (American Pipe), exceptions (Texas notice), and state-law standing vary | VW: limitations expired, class prohibitions/pre-suit requirements apply, Ohio DTPA does not allow consumer standing | Court: deferred American Pipe tolling issue for AZ/OR pending amendment; applied Mississippi pre-suit requirement (dismissed MS claim without prejudice); Texas §17.505 exception applies so DTPA claims not abated; Plaintiffs lack standing under Ohio DTPA |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires concrete, particularized injury)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (concreteness and particularization in Article III standing)
- Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (loss causation principles)
- Mendoza v. Zirkle Fruit Co., 301 F.3d 1163 (distinguishing fact of injury from amount; damages complexity for later stages)
- Hemi Group, LLC v. City of New York, 559 U.S. 1 (RICO proximate-cause requirement)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (directness in proximate-cause analysis)
- Reiter v. Sonotone Corp., 442 U.S. 330 (monetary overcharge can be injury to "property")
- American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (class action filing tolls statute of limitations for putative class members)
- Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393 (federal Rule 23 and state rule conflicts; framework for class-action procedural issues)
- Kearns v. Ford Motor Co., 567 F.3d 1120 (Rule 9(b) requires particulars for fraud-based advertising claims)